The banking sector remained under pressure on Friday, sending global markets teetering, despite assurances from several politicians about the stability of the financial system.
Wall Street was down, with the Dow Jones dropping 0.77%, the Nasdaq 0.88% and the broader S&P 500 index down 0.75% around 3:15 p.m. GMT.
In Europe, the places fall more: Paris and Frankfurt yield 2.02%, London 1.64% and Milan 1.91% around 3:15 p.m. GMT.
The banking sector of the broader Stoxx Europe 600 index declined for its part by around 4%, after a sharp increase in the cost of insurance against the risk of default (CDS) of several European banks, Deutsche Bank in the lead.
The statements of Christine Lagarde, President of the European Central Bank, reaffirming the resilience of the banking system which “has solid positions in terms of capital and liquidity”, and those reassuring of Olaf Scholz or Emmanuel Macron, have not had only a limited effect on feverish markets since the bankruptcy of the American bank SVB and the takeover by UBS of Credit Suisse.
“The euro zone is the zone where the banks are the most solid”, affirmed the French president, while the German chancellor judged that there is “no need to worry” for Deutsche Bank.
The first German bank was among the most battered banks on the stock market, with a fall of 11.03%, after having sunk more than 13%. Commerzbank lost 5.62% in Frankfurt.
In Paris, the Societe Generale share yielded 6.57%, the largest drop in the CAC 40 index, BNP Paribas also lost 5.74%. In London, Barclays lost 5.31% and HSBC 3.14%. Banco Sabadell fell by 4.51% in Madrid, ING by 4.21% in Amsterdam and Nordea by 7.86% in Copenhagen.
In Zurich, Credit Suisse fell by 6.49% and UBS by 5.70%, resuming some colors. According to Bloomberg, these banks are among those suspected by American justice of having helped Russian oligarchs to circumvent Western sanctions. Contacted by AFP, Credit Suisse declined to comment on the information and UBS did not respond.
In New York, the sector was also neglected, but to a lesser extent: JP Morgan Chase lost 1.88%, Morgan Stanley 4.02%, Goldman Sachs 2.11% and Bank of America 1.58%. The regional bank First Republic, particularly under pressure since the bankruptcy of SVB, dropped 2.87%.
US Treasury Secretary Janet Yellen will bring together the country’s financial regulators on Friday, including Federal Reserve (Fed) Chairman Jerome Powell.
– “Who will be the next one” –
“The fear of a contagion” in the banking sector “has not yet disappeared”, notes Neil Wilson, analyst at Finalto, who points to the sharp decline in European bank stocks on Friday, which “weighs on the general sentiment” of the market.
“As I have said many times over the past two weeks, the crisis will only end when investors stop wondering who will be next,” asserts the expert. “And it looks like we’re not there yet.”
Sign of the nervousness of investors, the bonds of European States, assets considered low risk, were very popular. The ten-year German debt rate, which varies inversely to the price of the bond, fell to 2.11% around 3:00 p.m. GMT, against 2.19% at the close on Thursday.
Safe havens such as the dollar, yen and gold were also sought after. On the other hand, the euro fell by 0.75% against the dollar, to 1.075 dollars for one euro.
“It is clear that after a brief respite at the start of the week, we are far from out of the woods,” warns Fiona Cincotta, analyst at City Index, interviewed by AFP. “As interest rates continue to rise, fears about the banking sector are likely to grow.”
The central banks of the United States, England, Switzerland and Norway have indeed announced a new increase in their key rates, their main tool in the fight against inflation. This “increases the pressure” on banks, according to CMC Markets analyst Jochen Stanzl.
Oil prices also fall, which is often a sign that investors fear an economic recession. A barrel of Brent from the North Sea for delivery in May lost 2.18% to 74.25 dollars, while a barrel of American WTI for the same term fell 2.27% to 68.37 dollars.
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